This article has been written by Mohd Aman Khan Afghani pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho).
Table of Contents
Introduction
As we know that the whole world is going through the most difficult time because of the prevailing Pandemic, due to this, many new ways have been discovered by people so that their work does not suffer due to the present situation. The present scenario has also changed the way people do business and enter into Business relationships. It can be seen that these days the classes are conducted online, most of the people are working from home, seminars are being held online and even the sensitive matters such as legal Contracts are made through online mode. So in short, it can easily be inferred that the Internet has become an integral part of everyone’s life, as it has come to the rescue of the people in these testing times. It can be said that the wide range of activities which are being done now with the help of the internet has made the old ways of doing the same activities redundant. The internet has an impact on the business activities and transactions which are being done by the people.
The term ‘Contract’ is defined in the Indian Contract Act, 1872, under Section 2(h), according to which, it is an agreement which is enforceable by Law. It is to be noted that the Indian Contract Act, 1872 does not specifically talk about the E-Contracts but the Indian Contract Act also does not prohibit the E-Contracts per se. It also must be noted that like any other Contracts, E-Contracts are also governed by Section 10 of the Indian Contract Act and thave to fulfill the requirements of Section 10 of the Indian Contract Act. So accordingly, the E-Contract has to be made through Lawful offer and acceptance, there should be a lawful object behind entering into an E-Contract, there should also be a lawful consideration, competent parties, free consent of the parties, the parties should intend to enter into a contractual relationship and the Contract should not be expressly void. So we can say that an E-Contract can be executed only when it fulfills all the above requirements given in Section 10 of the Indian Contract Act, 1872.
Understanding E-Contracts
E-Contracts can be said to be a division of E-businesses, very much like the Traditional business where the goods and services are exchanged for the price. E-Contract can be said to be a Contract that is made through the digital mode of communication. it is a type of contract which is made during E-commerce activities in which the interaction of the parties for entering into a Contract is being done through electronic means like Emails, or through recognized electronic agents. It is a contract that is shaped and is specific and is executed through a software system.
The Supreme Court in Trimex International FZE Ltd, Dubai Vs. Vedanta Aluminium Ltd, held that a Contract which is being entered into by or between the parties and the acceptance of the same is made through exchanging Emails, and it is recognized under the law
Main parties to an E-Contract
There are basically two main parties to an E-Contract, i.e. an Originator and the Addressee. An Originator as per IT Act is a person who generates, sends, transmits and stores any electronic message required to be sent, stored, or transmitted to some other person and does not include an intermediary. As per IT Act, an Addressee is a person who receives an electronic record sent by the Originator and also does not include intermediary.
Nature of E-Contracts
- In E-Contract the parties do not meet each other physically.
- Absence of Physical boundaries.
- Handwritten signatures are not required, rather there is a recognized electronic agent.
- Presence of Jurisdictional issues in case of breach of Contract.
- Absence of single authority to look into the whole process exclusively.
- Digital signatures are used and also electronic records as evidence in Court.
Subject matter of E-Contracts
- Normally physical goods are involved where those goods are ordered online and the payment is also made online through the Internet and the delivery of those goods is made physically.
- At times digital products like the Softwares can also be ordered.
- Services like Electronic Banking, financial advice etc can also be its subject matter.
So some of the important aspects to understand E-Contracts are:
- E-Contracts are being recognised under the IT Act:
Section 10A of the IT Act talks about the E Contracts. The aforesaid section talks about the validity of Contracts that are made by electronic means and also specifies that if the formation, acceptance or revocation of proposal are done in an electronic form or through some electronic means, then they cannot be said to be unenforceable. Section 4 of the IT Act also provides recognition to the E-Contracts.
- Evidence Act also gives recognition to E-Contracts:
According to the Indian Evidence Act, the E-Contract has the same effect legally as it is there with the paper based Contract.
- Indian Stamp Act recognition to E-Contract:
Stamp Act recognized E-Contracts. Although no specific provision is there, it still gives recognition to E-contracts. stamp duty had to be paid on the execution of the contract. both SignDesk’s stamp duty payment solution and stamp.it supports digital stamping and is currently in use by over 50 major Indian banks to pay stamp duty online.
Execution of E-Contracts
There are many options with the people to execute E-contracts which are:
- Digital Signatures:
The Parties to the E-contract can get the Digital Signature for themselves and then they can use the Digital signature to sign the E-contracts. The Digital signature certificate is being issued by any licensing authority and is considered to be a secure electronic record under the Evidence Act and the IT Act.
- Sharing of scanned copies of signed contracts:
The parties to the contract have another option available with them in which they can consider the option of circulation according to which their counsel shall prepare the execution versions of their Contract which are to be signed by the parties. In this, each party to the contract have to confirm through Email that they are willing and ready to enter into a Contract and then the Counsel will share the signature page to them of which the parties have to take a printout and affix their respective signature on those Signature pages and then they have to share those scanned copies of signature pages after signature to the Counsel and then the Counsel will verify them.
- E-mail can be used to convey the acceptance of Contract:
The parties also have the option with them in which they can exchange the Emails with each other containing the confirmation of Contract acceptance.
- Electronic signatures:
The parties also have the option to use Electronic Signature (E-Sign) for the purpose of executing the Contract. Once the Contract between the parties is being finalized by them, then the parties can use their E-sign to execute the contract.
Elements of E-Contracts
- Offer:
The Advertisements which are there on the Website are normally considered to be an invitation to offer and when a person responds through an email or by filling a form for the same then it can be said to be an offer. Offer is one of the essential parts of any Contract.
- Acceptance:
Contract is concluded when the offer is accepted. Here, the important thing is communication of Offer. So, the communication of offer is complete in case of E-Contract on the part of the proposer when it is put in the course of transmission to him and against the acceptor it is complete when it comes in the knowledge of the proposer, which means when the acceptance enters into the computer resource which is designated.
- Consideration:
It is also one of the essentials. The Consideration is said to be paid when payment is made for the goods ordered or services availed through online mode.
- Lawful object:
The object of E-Contracts should always be lawful, which means that they are not forbidden by law or illegal.
- Competent Parties:
Parties should be competent to enter into a contract, the essentials as given in section 10 of Indian contract Act.
- Free Consent:
The Parties should give free consent to enter into a contract. It must not be coerced or undue influence.
- Certainty of Terms:
The Terms of the E-Contracts should be reasonable and certain.
Kinds of E-Contract
They are mainly of Three types:
These are mainly the Licensing agreements which are used in software purchase.
These types of Contracts normally come into existence when the “I Agree” button is being clicked by the online buyer or the user. These types of Agreement require clicking on the screen icon as a signal of acceptance.
These are those agreements that become binding on two or more parties through the use of the website. When a person is using a website then he is required to accept the terms of usage of that website.
Conclusion
In conclusion, it can be said that the laws prevailing in India are not at all reluctant or averse towards the idea of E-Contracts and the Courts in India has also upheld the validity of E-Contracts on numerous occasions with the only requisite that they are in conformity with the Indian Contract Act, but at times problems do arise in its execution. The present crisis has forced people to accept these E-contracts for building contractual relationships and the legal system in India has already given recognition to these E-contracts, therefore it can be concluded after seeing the present situation and how these E-Contracts help people in keeping their business going on that the E-Contracts will take over the Tradition modes of Contract formation and execution and this crisis has made the perfect platform for the same. It can be said that this Covid crisis has acted as a catalyst to the rise of E-Contracts.
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